Barrick reaches deal to share profits with Tanzania on Acacia tax row
Barrick Gold executive chairman of the board John L. Thornton speaks during the company's annual general meeting in Toronto on Tuesday, April 25, 2017. (Nathan Denette/The Canadian Press)
The Canadian Press
Published Thursday, October 19, 2017 4:53PM EDT
TORONTO -- Barrick Gold Corp. (TSX:ABX) says it has reached a new partnership deal with the government of Tanzania to settle a tax dispute with its majority-owned Acacia Mining plc.
The company says the framework signed Thursday includes creating a new Tanzanian operating company to manage Acacia's three mines in the country, and a 50-50 sharing of economic benefits of the mines between the new company and the government.
Barrick said the benefits sharing will be achieved through transferring a 16 per cent interest in the three mines to the government, as well as through royalties and taxes.
The country's government will also have a say in the new company's operations, which will maximize employment for Tanzanians and look to increase gold processing in the country, Barrick said.
The company says the two sides have also agreed to form a working group to resolve the outstanding tax claims, and as a gesture of good faith Acacia would make a US$300- million payment to the government.
The deal, still subject to approval by Acacia, is the outcome of months of talks after the Tanzania government handed London-based Acacia a US$190-billion tax bill in July, alleging the 63.9-per-cent Barrick-owned company owes that much in back-taxes and penalties.
Tanzania had also imposed an export ban on concentrated gold and silver in March, which Barrick said at the time could impact about six per cent of its estimated 5.3 million- to 5.6-million ounces of gold production for the year through Acacia's mines.